The improving job market should continue to drive demand for housing up in 2013.
The Milken Institute ranked the San Jose – Sunnyvale – Santa Clara metropolitan area as the #1 ranked city for creating and sustaining jobs and economic growth in 2012. This metropolitan area was ranked #51 in 2011.
The economic downturn of 2008 lead to many layoffs and early retirements. Many of those hit hardest have already sold their homes and moved. There will probably be a reduction in the number of sellers unless home prices rise.
The economic downturn also reduced new construction. Investors began putting more emphasis on purchasing properties for rental income rather than fix-and-flip.
Tax laws are in a state of change but nothing is known which will encourage potential sellers to act now rather than later. Recent increases in taxes are likely to discourage investors from selling.
Very few homes are currently offered for sale. The only thing on the horizon which would increase the desire to sell is rising home prices.